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[2025] NSWCA 90
procedural. Orders 2–4 and 15–17 were stayed under r 51.44(1) pending determination of the appeal or further order; the motion’s costs were made costs in the appeal. No stay was granted for the Corporate...
The Court of Appeal temporarily protected Mrs Musumeci from specified orders while her appeal is decided. The judge considered it arguable that the original trial was unfair because medical evidence indicated she could not participate meaningfully or instruct lawyers, and her tutor could not readily fill that role. The risk of bankruptcy before the appeal was resolved outweighed the identified prejudice to Westpac, especially because the appeal was listed soon. The companies did not receive the same protection: they had not appealed the money judgments against them, and the judge was not satisfied that their challenge to a related property order was arguable.
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2,259 words · generated 07/10/2026
In Musumeci v Westpac Banking Corporation [2025] NSWCA 90, Griffiths AJA determined a motion seeking a stay of selected Supreme Court orders while an appeal was pending. The reasons distinguish between the position of Mrs Kathie Musumeci, the individual appellant, and that of the two corporate appellants, CAO Holdings Pty Ltd and Musumeci Property Investments (Receivers and Managers Appointed) Pty Ltd, referred to as MPI.
2 cited instruments linked from this judgment.
Westpac's underlying proceedings concerned an invoice discounting facility provided to Sentox Pty Ltd (in liquidation). Westpac claimed against Mrs Musumeci in deceit and under a guarantee, and alleged that the corporate entities had knowingly received funds ([4]). The underlying Liability Judgment was delivered on 27 June 2024 and the Relief Judgment on 11 December 2024 ([7]).
A central circumstance for Mrs Musumeci was her health at the time of the trial. After she collapsed during a mediation, a forensic psychiatrist, Dr Ahmed, reported that she was suffering from mixed anxiety and depressive disorder and was not fit to participate in litigation or instruct lawyers. The report also expressed the view that she might become fit for a later hearing within three to six months ([5]). The primary judge declined to vacate the hearing, appointed her son Adrian as her tutor, and permitted her affidavit evidence to be relied upon without making her available for cross-examination. The hearing began on 8 May 2024 ([6], [10]).
Mrs Musumeci and the corporate entities appealed some of the orders. Westpac had served a bankruptcy notice on Mrs Musumeci, with the compliance period extended to 15 May 2025 ([8]). The motion sought a stay pending an appeal listed to begin on 1 July 2025. Counsel for the applicants said its preparation was on track ([17]).
Griffiths AJA granted a stay of orders 2–4 and 15–17, which affected Mrs Musumeci. The judge declined to grant a stay to the Corporate Applicants because they had not appealed the money judgments in orders 9–12 and had not established an arguable case concerning order 18 ([28]–[34]). The result was therefore divided, rather than a stay for all appellants or a refusal of the application in full.
The judgment records that the applicants accepted they needed to show an arguable case, without requiring the Court of Appeal to conduct a detailed assessment of the appeal's merits ([9]). Griffiths AJA said that the relevant stay principles were well settled and had recently been restated and affirmed in Bolton v WAM Active Ltd [2025] NSWCA 81 ([22]). The reasons do not set out a comprehensive general test. They apply the arguable-case requirement and assess the comparative prejudice on the particular evidence.
For Mrs Musumeci, grounds 1 and 2 challenged the decision not to vacate the trial and instead have her participate through a tutor ([10]–[11], [23]). The judge considered the appeal grounds arguable because Dr Ahmed's report indicated that she was not in a fit state to participate meaningfully, whether personally or by providing relevant information to her tutor (24). Her son had been about 14 when the events giving rise to the litigation occurred and had no personal involvement in them (24). This was relevant to whether he could obtain or supply useful instructions about the historical events.
The judge also considered the practical consequences for the conduct of the trial. Although Mrs Musumeci had not filed further affidavit evidence after the directions for evidence in reply, the judge accepted that her defence might still have been prejudiced by her inability to give instructions about the case and the cross-examination of Westpac's witnesses ([25]). The reasons focus on the practical limits of the tutor arrangement: it was doubtful that her son could overcome her inability to provide instructions while experiencing serious mental health issues. The allegations against Mrs Musumeci included fraud and deceit, and the judge considered it arguable that fairness required a meaningful opportunity to test them through informed cross-examination ([25]).
On prejudice, the judge accepted that Mrs Musumeci could be made bankrupt before the appeal concluded, given Westpac had already commenced bankruptcy proceedings ([13], [26]). That risk was weighed against Westpac's concerns, including possible effects on the relation-back day and transactions that a trustee might investigate under ss 115 and 122 of the Bankruptcy Act 1966 (Cth) ([19], [26]). The judge regarded those concerns as relevant but gave them little weight in the circumstances. There was no allegation that Mrs Musumeci had acted inconsistently with the existing asset preservation order, and the bankruptcy notice's compliance date had already been extended to 15 May 2025 ([26]).
The expected length of the stay also mattered. The appeal was listed for a hearing on 1 July 2025 and counsel said preparation was on track ([17]). Griffiths AJA considered the stay would operate for a relatively short period, allowing time for the appeal hearing and judgment ([27]). On the evidence before the court, the prejudice to Mrs Musumeci significantly outweighed that to Westpac ([26]).
The Corporate Applicants were treated differently. Their money judgments, orders 9–12, were not challenged in the notice of appeal. Those orders awarded Westpac $5,131,043.57 and $1,120,367.76 against the companies, as well as costs ([28]). Order 18, which declared an equitable charge over MPI's Northern Territory properties, was challenged, but the judge was not persuaded that the companies had shown an arguable case about it. The reasons note that the appeal did not appear to challenge relevant findings about MPI's control or the tracing of funds to its assets ([29]). Westpac's submission that freezing orders did not provide creditors the same protection as liquidation was accepted ([30]–[32]). Those differences explain why the individual appellant received a stay and the companies did not.
This is a procedural stay ruling, not a decision that purports to change the law on bankruptcy, mental capacity, or the duties of a trial judge. Its own description of the relevant stay principles is that they are “well settled”, recently restated and affirmed in Bolton v WAM Active Ltd ([22]). It does not reproduce a full statement of those principles or announce a new test.
The judgment applies the arguable-case threshold in a fact-specific way. It treats a possible inability to participate meaningfully, including inability to instruct counsel about the conduct of the trial, as relevant to whether an appeal concerning trial fairness is arguable ([23]–[25]). It then weighs the individual's demonstrated prejudice against the consequences of delaying enforcement. The short time before the listed appeal hearing and the evidence of a possible bankruptcy before then were significant in that comparison ([13], [26]–[27]).
The ruling also demonstrates that a stay application may produce different outcomes for parties appealing from the same underlying litigation. The court assessed the individual and corporate applicants separately. For the companies, the unappealed money judgments and the limited scope of the challenge to order 18 were material ([28]–[33]). The judgment does not state that these circumstances will necessarily determine future applications; it records their significance in this one.
As to the cited bankruptcy provisions, ss 115 and 122 appeared in Westpac's argument about the possible relation-back day and transactions a trustee might investigate ([19]). Griffiths AJA did not interpret those provisions. The reasons say only that the relation-back concern was relevant but deserved little weight on the evidence before the court ([26]). Accordingly, the judgment should not be read as resolving the operation of those sections.
At [22], the judge states: “The relevant legal principles are well settled. They were recently restated and affirmed by Leeming JA in Bolton v WAM Active Ltd.” In plain English, the court regarded the governing stay principles as established, and relied on a recent Court of Appeal restatement. The judgment does not reproduce that restatement in detail.
At [24], the judge identifies why Mrs Musumeci's grounds were arguable. The report indicated she was not fit to participate meaningfully, her son had no personal involvement in events from 2014, and the hearing proceeding in those circumstances might have been unfair. In plain English, appointing a tutor did not necessarily solve the practical problem if the litigant could not supply useful instructions and the tutor did not know the historical events.
At [25], the judge says that “fairness required her to be given a meaningful opportunity to test those allegations, particularly by an informed cross-examination.” This is expressed as an arguable appellate point, not a final determination that the original trial was legally unfair. The stay judge was deciding whether the appeal had a sufficiently arguable basis, not finally deciding the appeal.
At [26], the judge concludes that Mrs Musumeci's prejudice “significantly outweighs” Westpac's. Put simply, the court considered that the risk of bankruptcy before an imminent appeal, alongside the arguable trial fairness issue, outweighed the demonstrated cost of temporarily delaying enforcement. The judge did not disregard Westpac's creditor-related concerns, but assessed them as having limited weight on the evidence presented.
At [29], the judgment explains that the money judgments against the companies were not challenged and that the court was not persuaded there was an arguable case concerning order 18. In plain English, a challenge to one property-related order did not, on these facts, justify stopping the effect of other, unappealed judgments.
The decision is most directly relevant to stay applications pending appeal where the applicant can identify a specific, arguable ground and evidence of practical prejudice if enforcement proceeds before the appeal is determined. For an individual litigant, the factors considered here included medical evidence about capacity to participate and instruct lawyers; the adequacy of a tutor arrangement; the litigant's ability to assist with the testing of serious allegations; an imminent bankruptcy process; and a short period before the appeal hearing ([5], [13], [24]–[27]).
The reasoning highlights a distinction between formal representation and meaningful participation. The court's concern was not simply that a tutor had been appointed, but that the appellant might have been unable to provide the tutor with relevant information, while the tutor had no personal involvement in the historical events ([24]–[25]). A case relying on this reasoning would need to be assessed against its own evidence and procedural history. The judgment does not establish that medical unfitness automatically warrants a stay or that appointing a tutor is invariably insufficient.
The decision also indicates the importance of identifying exactly which orders are appealed. The corporate applicants were not granted a stay where they had not appealed the money judgments and were not shown to have an arguable basis concerning the property charge ([28]–[33]). It therefore illustrates the risk of treating a group of related parties as having a single, undifferentiated stay case.
The judgment does not decide the merits of Mrs Musumeci's appeal, the ultimate effect of the bankruptcy notice, or the enforceability of any order. Its focus was the interim question of whether specified orders should be stayed pending appeal.
The supplied judgment contains no discussion of later judicial treatment of Musumeci v Westpac Banking Corporation, which was decided on 2 May 2025. It would therefore be unsupported by this source to say that a later court has followed, distinguished, or otherwise treated this decision.
The judgment itself refers to Bolton v WAM Active Ltd [2025] NSWCA 81 as a recent restatement and affirmation of the relevant stay principles ([22]). It also refers to the underlying Supreme Court decisions, Westpac Banking Corporation v Sentox Pty Ltd (No 2) [2024] NSWSC 783 and Westpac Banking Corporation v Sentox Pty Ltd (No 3) [2024] NSWSC 1578, to identify the substantive and consequential orders from which the appeal and stay application arose ([1], [7]). House v The King (1936) 55 CLR 499; [1936] HCA 40 appears in the account of the applicants' submissions about the procedural discretion exercised below ([11]). The judgment does not give a detailed analysis of that authority.
The appeal itself remained unresolved in this judgment. The stay ruling does not determine whether the decision to proceed with the trial while Mrs Musumeci participated through a tutor was an appealable error, whether the trial was ultimately unfair, or what orders should follow if the appeal succeeds. Those matters were for determination in the appeal, not this motion.
The judgment does not decide whether the statutory relation-back concerns raised under ss 115 and 122 of the Bankruptcy Act 1966 (Cth) would ultimately affect a trustee's investigation of transactions. It assesses the argument only as part of the comparative prejudice on the stay application and gives it little weight on the evidence then before the court ([19], [26]).
Nor does the decision set out a general rule on how medical evidence should be assessed when a party seeks to vacate a trial, or when a tutor can adequately provide instructions. Its conclusions depend on the particular psychiatrist's report, the tutor's lack of personal involvement in the relevant events, the nature of the allegations, and the anticipated cross-examination ([24]–[25]).
Finally, the decision leaves open how a stay application should be assessed where a company appeals some consequential order but not the money judgment on which it depends. The court's refusal of a stay for the Corporate Applicants rests on the particular combination of unappealed judgments, the limited challenge to order 18, and the submissions about creditor protection in liquidation ([28]–[33]).
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Musumeci v Westpac Banking Corporation [2025] NSWCA 90
Hearing dates: 28 April 2025
Date of orders: 02 May 2025
Decision date: 02 May 2025
Before: Griffiths AJA
Decision: (1) Orders 2-4 and 15-17 be stayed pursuant to r 51.44(1) of the Uniform Civil Procedure Rules 2005 (NSW) pending determination of the appeal arising from the notice of appeal filed 11 March 2025 or until further order.
(2) The costs of the notice of motion filed 2 April 2025, be costs in the appeal.
Catchwords: PROCEDURE — stay pending appeal — whether the applicant has established an arguable case — whether stay should be granted where bankruptcy proceedings have already commenced — prejudice where applicant was not in a fit state to inform cross-examination — stay ordered in relation to the individual applicant but not the corporate applicants
Legislation Cited: Bankruptcy Act 1966 (Cth) ss 115, 122
Uniform Civil Procedure Rules 2005 (NSW) r 51.44(1)
Cases Cited: Bolton v WAM Active Ltd [2025] NSWCA 81
House v The King (1936) 55 CLR 499; [1936] HCA 40
Westpac Banking Corporation v Sentox Pty Ltd (No 2) [2024] NSWSC 783
Westpac Banking Corporation v Sentox Pty Ltd (No 3) [2024] NSWSC 1578
Texts Cited: Nil
Category: Procedural rulings
Parties: Kathie Musumeci (First Applicant)
CAO Holdings Pty Ltd (Second Applicant)
Musumeci Property Investments (Receivers and Managers Appointed) Pty Ltd (Third Applicant)
Westpac Banking Corporation (Respondent)
Representation: Counsel:
M Condon SC and M Kearney (Applicants)
J Foley (Respondent)
Solicitors:
Bridges Lawyers (Applicants)
Gadens Lawyers Sydney (Respondent)
File Number(s): 2024/00478483
Publication restriction: Nil
By notice of motion filed on 2 April 2025, the applicants seek a stay in respect of particular orders made by Ball J on 11 December 2024 (see Westpac Banking Corporation v Sentox Pty Ltd (No 3) [2024] NSWSC 1578 (Relief Judgment)), which orders are consequential on Ball J’s substantive decision in Westpac Banking Corporation v Sentox Pty Ltd (No 2) [2024] NSWSC 783 (Liability Judgment).
The applicants on the motion are also the appellants who, on 11 March 2025, filed a notice of appeal which seeks to set aside the orders the subject of the stay application.
For the following reasons, I consider that the first applicant (Mrs Kathie Musumeci) should be granted a stay, but different considerations apply to the second and third applicants (i.e. CAO Holdings Pty Ltd and Musumeci Property Investments (Receivers and Managers Appointed) Pty Ltd (MPI), whom I shall refer to collectively as the Corporate Applicants).
The respondent (Westpac Banking Corporation) brought successful proceedings against the applicants and others in debt and deceit relating to an invoice discounting facility (IDF) which it provided to Sentox Pty Ltd (in liq). Sentox operated a fruit and vegetable wholesale business from Flemington Markets in Sydney. Mrs Musumeci was previously a director of Sentox and is currently a director of the Corporate Applicants. Westpac claimed damages against Mrs Musumeci for the tort of deceit and in reliance on her guarantee concerning the IDF. Westpac’s claims against the Corporate Applicants related to the knowing receipt of funds.
During the course of a mediation prior to the hearing of the proceedings below, Mrs Musumeci collapsed and was admitted to hospital. She was later diagnosed by a forensic psychiatrist, Dr Tanveer Ahmed, as suffering from mixed anxiety and depressive disorder which he described as “a serious and debilitating mental health condition”. In his report dated 26 April 2024, Dr Ahmed opined that Mrs Musumeci “is not currently fit to participate in the court in litigation and to instruct lawyers due to the volatility of her current mental state”. He added that, in his opinion there were reasonable prospects that Mrs Musumeci would be mentally fit to sustain what was then scheduled to be a four-week hearing commencing in May 2024 if it was conducted within a period of three to six months from the date of the report.
On 1 May 2024, Mrs Musumeci filed a notice of motion below seeking to vacate the hearing date on the basis that Mrs Musumeci was not fit to participate in the proceeding or instruct lawyers. Ball J dismissed the motion and instead appointed Mrs Musumeci’s 24-year-old son (Adrian) as her tutor to instruct during the proceeding. The substantive hearing commenced on 8 May 2024.
The Liability Judgment and the Relief Judgment were published on 27 June 2024 and 11 December 2024 respectively.
On 17 March 2025, Westpac served a bankruptcy notice on Mrs Musumeci. On 7 April 2025 and 24 April 2025 respectively, the time for compliance with the requirements of the bankruptcy notice were extended and then further extended up to and including 15 May 2025.
While acknowledging that it was not necessary or appropriate for the Court to engaged in a detailed assessment of the merits of the appeal, the applicants accepted that they needed to demonstrate that they had an arguable case.
It is sufficient to focus on grounds 1 and 2 of the notice of appeal because as will emerge, I consider that they do raise an arguable case. Those grounds challenge the primary judge’s findings that it was appropriate for Mrs Musumeci to participate in the final hearing through a tutor rather than vacate the hearing and permit her personally to give instructions and appear as a witness. His Honour said at [11] of the Liability Judgment:
… Shortly before the hearing was due to commence, the solicitors for Mrs Musumeci made an application to vacate the hearing on the basis that Mrs Musumeci was mentally unwell and incapable of giving instructions or evidence. I indicated that I was not willing to vacate the hearing, but that I thought it was appropriate that Mrs Musumeci continue to participate in the hearing through a tutor and that the defendants should be entitled to rely on her affidavit evidence without making her available for cross-examination on the basis that the absence of cross-examination would be relevant to the weight to be given to the evidence Mrs Musumeci gives. That condition was acceptable to the Bank which also agreed that it would not seek a personal costs order against the tutor appointed to represent Mrs Musumeci. As a result, the commencement of the hearing was postponed for two days to permit arrangements to be put in place for the appointment of a tutor. On 3 May 2024, Mrs Musumeci’s son, Mr Adrian Musumeci, filed his consent to acting as Mrs Musumeci’s tutor.
(a) serious allegations of misconduct were raised against Mrs Musumeci; (b) the case required findings as to Mrs Musumeci’s credit as a witness; (c) Mrs Musumeci’s mental condition at the time of the hearing was “dire”; and (d) it was inadequate for the primary judge to proceed with the hearing merely because the applicants would be entitled to rely on Mrs Musumeci’s affidavit evidence when Westpac agreed that the weight to be given to her evidence would take into account the absence of cross-examination.
As to the applicants’ prejudice, they contended that if a stay was refused this would likely force Mrs Musumeci to abandon the appeal, having regard to what was said by their instructing solicitor, Benjamin Dibden, in an affidavit sworn 2 April 2025 at [25]. That paragraph includes a statement on information and belief that Mrs Musumeci would be required to declare bankruptcy as she is unable to pay the judgment debt and that the appellants would not be able to pay for any legal fees and disbursements of the trustee in bankruptcy in pursuing the appeal. Therefore, the appeal would have to be abandoned. That evidence also suggests that Mrs Musumeci would be required to sell her own home as well as the property in which her 92 year old father-in-law presently lives.
Mr Dibden provided a second affidavit dated 28 April 2025, to which objection was taken on the basis of its late service. The second affidavit elaborated upon some of the matters summarised above in the first affidavit. I am content to rely upon the first affidavit in finding that Mrs Musumeci has established significant prejudice if a stay is not granted. This is primarily because, absent a stay, Mrs Musumeci could be made bankrupt prior to the appeal concluding, noting that Westpac has already commenced the bankruptcy process.
In addition, the applicants rely upon the prejudice that, absent a stay, Mrs Musumeci would be required to sell her home, as well as a second property where her 92 year old father-in-law lives.
As to the Corporate Applicants, it was contended that refusal of a stay would open the door for Westpac to serve statutory demands and proceed to winding-up, which would then involve a liquidator who would have to decide whether or not to prosecute the appeals.
In all these circumstances, the applicants contended that if the stay is not granted and the appeal succeeds, the appeal would be rendered inutile as Mrs Musumeci would have been declared bankrupt and the Corporate Applicants would be in liquidation, together with the other personal prejudice relating to the two residential homes.
Significantly, the applicants also emphasised that the appeal proceedings are listed for a two-day hearing due to commence relatively soon, on 1 July 2025. Senior counsel for the applicants, Mr Condon, confirmed that preparation for the hearing was “on track”. Hence, the period of any stay would not be lengthy. The applicants also point to the indisputable fact that Westpac is a well-financed litigant and has the benefit and protection of the existing freezing orders made in the proceedings below in relation to each of the applicants.
In opposing the stay application, Westpac contended that there is no reasonable prospect that the appeal will result in orders 2A, 3 or 4 being set aside. It added that a stay of order 2A would delay the commencement of bankruptcy proceedings and be against the public interest, as well as prejudicing Mrs Musumeci’s creditors, including Westpac. As to orders 2 and 15-17, Westpac contended that the declarations made therein should not be stayed because there was no prejudice to Mrs Musumeci. In further support of its contention that there was no arguable appeal against orders 2A-4, Westpac contended that it was unsurprising that the primary judge did not accept Mrs Musumeci’s untested evidence that she was pressured by multiple bank officers on multiple separate occasions to execute multiple guarantee instruments, nor accept her evidence that she didn’t understand that she was giving a guarantee. This is because Westpac contended that her evidence was “implausible in the extreme” and no appeal ground was specifically directed to the relevant findings.
(a) it was not disputed below that Mr Andrew Musumeci (Mrs Musumeci’s husband) had perpetrated the fraud; (b) there was no dispute below that he was a controlling mind of both the Corporate Applicants; and (c) there was no dispute below that funds flowing from the fraud were received by the Corporate Applicants in the amounts ultimately ordered.
The relevant legal principles are well settled. They were recently restated and affirmed by Leeming JA in Bolton v WAM Active Ltd [2025] NSWCA 81.
For the following reasons, I am persuaded that Mrs Musumeci should be granted a stay. As noted above, it is sufficient to focus on grounds 1 and 2 of the notice of appeal which I consider are sufficiently arguable for the purposes of this application.
Both of those grounds focus on the primary judge’s decision not to vacate the hearing in light of Mrs Musumeci’s health issues, and rather to proceed with Mrs Musumeci participating through a tutor. This necessarily meant that Mrs Musumeci would not be available for cross-examination. I accept that these grounds are at least arguable in circumstances where:
(a) having regard to Dr Ahmed’s report, it was evident that Mrs Musumeci was in no fit state to participate in the proceeding in any meaningful way whether personally or to provide relevant information to her tutor; (b) the events which gave rise to the litigation date back to 2014 when the tutor (Mrs Musemici’s son) was approximately 14 years of age and had no personal involvement in the relevant events; and (c) the unfairness to Mrs Musumeci’s case created by the hearing proceeding at a time when she was in no fit state to give instructions to counsel (or presumably assist her tutor in giving him instructions) relating to the conduct of the case and, in particular, cross-examining the Bank’s witnesses.
Directions were made on 14 April 2023, directing the defendants to serve any further evidence by 11 July 2023. Mrs Musumeci did not file any further affidavits. That omission is relevant, as Mrs Musumeci had an opportunity to file affidavit evidence in reply to Westpac's witnesses. I consider, however, that there is considerable force in Mr Condon’s submission that the presentation of Mrs Musumeci’s defence could have been prejudiced by the decision to proceed with the hearing on the basis outlined above. As Mr Condon pointed out, having regard to Dr Ahmed’s evidence concerning Mrs Musumeci’s incapacity to participate in litigation and instruct her lawyers, it is difficult to see how counsel representing her at the trial could have obtained meaningful instructions from her (or her tutor) which would guide the nature and scope of his cross-examination of Westpac’s witnesses. It is doubtful that this practical unfairness could be overcome by the involvement of her tutor who had no personal involvement in the relevant matters and was placed in a difficult position of obtaining instructions from his mother who was suffering serious mental health issues. Moreover, as noted above, the Bank’s case involved serious allegations of fraud and deceit against Mrs Musemici and it is arguable that fairness required her to be given a meaningful opportunity to test those allegations, particularly by an informed cross-examination.
For these reasons, I consider that there is at least an arguable case that the conduct of the trial below was unfair to Mrs Musumeci. I also consider that insofar as the balance of convenience is concerned that her prejudice, as outlined above, significantly outweighs that of Westpac. I consider that Westpac’s contentions regarding the relation-back day are relevant but warrant little weight as part of the comparative exercise. As matters stand at present, the time for complying with the bankruptcy notice has been extended to 15 May 2025 and it remains to be seen whether there might be a further extension. In any event, I believe that there is force in Mr Condon’s submission that Westpac’s argument has a theoretical air about it. This is highlighted by the fact that there is no allegation, for example, that Mrs Musumeci has engaged in conduct inconsistent with the existing asset preservation order, which conduct could highlight the need for an early relation-back period. In the circumstances, I consider that any prejudice in this regard to Westpac and other creditors is outweighed by the prejudice to Mrs Musumeci, as outlined above.
Finally, and importantly, I am conscious of the fact that the stay will operate for only a relatively short period of time, given the imminent date for the hearing of the appeal and allowing appropriate time for judgment to be delivered.
On the basis of the existing evidence, however, I consider that the Corporate Applicants are in a different position. They are undoubtedly affected by orders 9-12, but it is notable that none of those orders are challenged in the notice of appeal filed 11 March 2025. Those orders provide judgment for Westpac against both the Corporate Applicants in the amount of $5,131,043.57 and $1,120,367.76 respectively. The Corporate Applicants were also ordered to pay Westpac’s costs on the ordinary basis.
For all those reasons, I propose to order that:
Orders 2-4 and 15-17, (all of which affect Mrs Musumeci) be stayed pursuant to r 51.44(1) of the Uniform Civil Procedure Rules 2005 (NSW) pending determination of the appeal arising from the notice of appeal filed 11 March 2025 or until further order.
The costs of the notice of motion filed 2 April 2025, be costs in the appeal.
**********
Musumeci
Westpac Banking Corporation [2025] NSWCA 90
(1936) 55 CLR 499
Orders 2–4 and 15–17 were stayed under r 51.44(1) pending determination of the appeal or further order; the motion’s costs were made costs in the appeal. No stay was granted for the Corporate Applicants.
On the issue of prejudice to Mrs Musumeci, Westpac contended that there was no real prospect that Mrs Musumeci would disturb the money judgment against her, thus there was no reason to delay the bankruptcy proceedings. In addition, Westpac contended that any delay in progressing the bankruptcy proceedings could affect the relation-back day and affect transactions which might be investigated and set aside by any trustee in bankruptcy, referring to ss 115 and 122 of the Bankruptcy Act 1966 (Cth).
As to the stay sought by the Corporate Applicants, Westpac emphasised that no appeal had been brought against the money judgments and costs orders concerning either of the Corporate Applicants (i.e. orders 9-12).
In addition, Westpac contended that those orders were “unimpeachable” because:
Order 18 made on 11 December 2024, which is one of the orders challenged in the notice of appeal, involves a declaration that Westpac has an equitable charge over various properties in the Northern Territory owned by MPI to secure the repayment of the relevant judgment debt, plus interest in relation to MPI. This order, together with order 9 which gave judgment to Westpac against MPI in the amount of $5,131,043.57 affect MPI. They are consequential upon the primary judge’s finding that money lent by the bank under the IDF could be traced to assets held by MPI. Although the primary judge found at [6] of the Liability Judgment that MPI was controlled by Mrs Musumeci, I do not understand this finding to be challenged in the notice of appeal nor is there any ground in the notice of appeal which challenges the primary judge’s statement at [9] of the Liability Judgment. I am not persuaded that the Corporate Applicants have demonstrated an arguable case in relation to order 18.
In opposing the stay sought by the Corporate Applicants, Westpac described the essence of the application as being that, notwithstanding that the Corporate Applicants had not paid the amounts they had been ordered to pay nor appealed against those orders, the orders should be stayed to ensure that the Corporate Applicants can prosecute an appeal on a legal point with respect to some assets of MPI without the risk of either company being wound-up. Westpac also pointed out that there was no dispute below that funds flowing from the fraud perpetrated by Mr Andrew Musumeci were received by the Corporate Applicants as found by the primary judge.
Mr Foley, of counsel, who appeared for Westpac, submitted that although freezing orders were in place against the Corporate Applicants, those orders did not give Westpac or, indeed, other creditors the same protection as would flow from the companies being placed in liquidation.
I accept Westpac’s submissions relating to the Corporate Applicants.
For these reasons, I am not persuaded that the Corporate Applicants should have a stay.